Sainsbury's sets out growth plans for 2020 as profits jump

Sainsbury's has vowed to generate nearly half of its total sales from beyond food by 2020, as it attempts to grab sales from Asda and the market leader Tesco by increasing its revenues from general merchandise, online and retailing services.

The UK's third-biggest grocer yesterday unveiled its plans for the next decade, which include opening shops overseas, as it delivered a 9 per cent rise in full-year pre-tax profits.

Sainsbury's said that 125,000 of its staff, including board members, would share a bonus pot of £60m, but this was down from a record £80m last year, with the grocer blaming "stretching" performance targets in 2010-11.

The 934-store supermarket said that only 25 per cent of its total sales currently came from outside of food, but by 2020 this would grow to 45 per cent. This will be driven by Sainsbury's growing its non-food, online offer and services, such as banking and travel exchange bureaux, as well as launching operations overseas and adding new digital channels and food services.

Justin King, the chief executive of Sainsbury's since 2004, described these new business opportunities as "twinkles in our eyes" and insisted they would not be derailed by this week's announcment that Darren Shapland, its group development director, will step down at the annual meeting on 13 July.

A key opportunity that Mr Shapland had been overseeing was the potential launch of Sainsbury's in China, where it already has a team on the ground. While Mr King refused to be drawn on China, he said more broadly: "All of our development plans remain unchanged by Darren's departure. We are not going to miss a beat."

Luke Jensen, who is currently Sainsbury's managing director for non-food products, is to take over the role of group development director.

For the year to 19 March, Sainsbury's grew its underlying pre-tax profits by 9 per cent to £665m compared with the year before, which was marginally ahead of City forecasts of £659m. In an industry characterised by wafer-thin margins, the grocer's crucial operating profit margin rose 14 basis points to 3.5 per cent, although this still lags Tesco's 6.14 per cent in the UK and Morrisons' 5.5 per cent.

Sainsbury's total sales rose by 7.1 per cent to £22.94bn. The grocer was boosted as its customer numbers rose to a record of 21 million transaction a week, up 1 million. Its underlying sales, excluding fuel and VAT, rose by 1.5 per cent over the year, although its growth rate slowed markedly between a strong third quarter and weak fourth one.

Sainsbury's said its non-food sales were growing at more than three times the rate of food and that it expected to devote 40 per cent of its new space, notably store extensions, to general merchandise products. The grocer – the UK's third biggest fashion retailer by sales volumes – has signed up Gok Wan, the fashion designer known for his How to Look Good Naked TV series. He will launch a clothing collection for Sainsbury's Tu brand this year.

Sainsbury's opened 1.5m sq ft of new space, covering new stores and extensions, in 2010-11 and expects to continue this momentum this year, including opening between one and two of its convenience stores each week. Mr King said the sales boost enjoyed by the retail sector from the balmy weather, Easter bank holidays and royal wedding in April did not change the fact that consumer confidence was at an "all-time low", with high petrol prices having the biggest impact on spending. Sainsbury's is to raise its full-year dividend by 6.3 per cent to 15.1p.

News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
PROMOTED VIDEO
News
people
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Sport
Greg Dyke insists he will not resign as Football Association chairman after receiving a watch worth more than £16,000 but has called for an end to the culture of gifts being given to football officials
football
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
ebooksAn unforgettable anthology of contemporary reportage
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
i100
Sport
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
boxing
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments